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GDP preview points to 4.05% drop in the Brazilian economy in 2020 – Prime Time Zone

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In a year marked by the pandemic, if confirmed, it will be the biggest fall for the country’s economic activity in history; December IBC-Br registers an increase of 0.64%

Rodrigo Felix Leal / AEN-PRCentral Bank data point to the biggest fall in the Brazilian economy in history

Influenced by the crisis of the new coronavirus, a Brazilian economy plunged 4.05% in 2020, according to the Economic Activity of the Central Bank (IBC-Br), released on the morning of Friday, 12. Considering the preview of the Gross Domestic Product (GDP), if the number is confirmed, it will be the biggest fall of the Brazilian economy in history and will interrupt the sequence of two consecutive years of progress. The official value of GDP is released quarterly by the Brazilian Institute of Geography and Statistics (IBGE). Data for last year will be published on March 3. The financial market estimates a 3.46% drop in the economy in 2020, according to the Focus Bulletin also released by the central bank, while the economic team predicts a 4.5% retraction, the same value pointed out by the International Monetary Fund (IMF).

The social isolation measures adopted to mitigate the spread of Covid-19 the global economy stagnated in 2020. In Brazil, the situation was even more critical since economic activity was already weakly recovering from internal crises in the years 2014 and 2015. Credit Suisse survey shows that the country will have an average annual growth of 0 , 2% between 2011 and 2020, well below the average of 1.6% recorded in the interval between 1981 and 1990, popularly known as the decade lost by the stagnation of the economy amid the skyrocketing of the inflation and lack of monetary control. IBGE data show that the national economy was on its side even before the pandemic, reflecting the wrong policies and poor investments. In 2019, GDP grew 1.4%, compared to the 1.8% increase registered in 2018, and 1.3% in 2017. The previous years were catastrophic: a 3.3% decrease in 2016, preceded by an even greater fall. , of 3.5%, in 2015. In 2014, GDP closed with a paltry 0.5%. The data contrast with the economic strength registered at the end of the first decade of the millennium and the beginning of the 2010s, when Brazil was riding the global wave of commodities. In 2011, the economy advanced 4%, followed by an increase of 1.9% in 2012, and growth of 3% in 2013.

Data from the national monetary authority point to an increase of 0.64% in the December IBC-Br, compared to an increase of 0.59% in November, the eighth consecutive month with positive results. In comparison with December 2019, the increase was 1.34%. In the last quarter of the year, economic activity increased by 3.14%, but fell by 0.69% in parallel to the same period of the previous year. Although economists consider the IBC-Br as an anticipation of GDP, the two surveys take different criteria in their composition. While the BC’s analysis assesses variables in the service, industry and agribusiness sectors, the result of the IBGE is the sum of all goods and services produced in the country. The Brazilian economy grew 7.7% in the third quarter of 2020, after registering two consecutive periods of retraction. The advance between July and September was below that projected by government analysts and technicians. The Central Bank estimated an increase of 9.4%, while federal government forecast 8.3% growth. Compared to the same quarter of 2019, GDP decreased by 3.9%. Despite the increase, the Brazilian economy still accumulates a 5% retraction in 2020.

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GDP preview points to 4.05% drop in the Brazilian economy in 2020 - Prime Time Zone